DeFi Engineering part 1: Introduction
Defining DeFi, and sharing our ambitions for the DeFi ecosystems
Before we delve into what DeFi engineering is and explore some of its challenges and opportunities, let’s first define it. DeFi is short for decentralized finance and is powered by blockchain technology. It is a new paradigm which provides an alternative to traditional financial institutions such as banks, insurance and fintech companies.
Centralized companies require financial transactions to go through middlemen (often multiple). Each middleman takes time to process, charges a fee and can ultimately decide whether to accept or reject the transaction.
DeFi, through the use of smart contracts, allows for secure, peer-to-peer transactions. By cutting out multiple parties, this makes the process cheaper, faster and accessible to everyone who wants to participate. It is the true democratization of capital.
DeFi encompasses all typical financial instruments. Users can lend or borrow assets on Aave or Compound, earn interest rates in Anchor or Convex protocols, share risk (and rewards) by writing options using Opyn platform, partaking in insurance pools such as Nexus Mutual or trade derivatives.
DeFi is stimulating the financial world by opening new predictive markets, introducing new hedging tools like ETH²(check out crab strategy) and reducing fluctuation with different stablecoin classes.
These opportunities, together with rising financial inflation and geopolitical conflicts, have led DeFi to already lock in over 200 billion dollars of value in just 18 months.
So how is Efficient Frontier approaching this?
One reason we are so bullish on DeFi is that it operates as core infrastructure for Web 3. You’ve no doubt heard about the rise of NFTs and DAOs (yes the crypto crew love their lingo…).
DeFi technology is the engine that powers both of these.
At Efficient Frontier, we see a bright future in the sphere and are positioning ourselves to be strong players in the development of the DeFi ecosystem. Our mission is to make DeFi markets as liquid and efficient as traditional systems. Utilizing our proprietary IP and technology, we are building tools and algorithms with the following core tenets:
-Making DeFi capital efficient
-Having the ability to best concentrate liquidity
-Building healthy tokenomics
- Providing bespoke execution services for customers
Inspired by the transparent nature of DeFi, in the next post we highlight the specific challenges surrounding different Blockchains, Smart Contracts, R&D and Security.
If this got you excited about DeFi engineering and you want to join our journey, we have lots of open positions